Abengoa SA, the Spanish renewable energy developer on the verge of insolvency, will seek to sell its biofuel business as part of a debt restructuring plan to avoid bankruptcy.
A plan presented Jan. 25 to the board establishes “the sale of all non-core assets including all the first generation biofuel ones," the Seville, Spain-based company said in an e-mailed statement. “The feasibility plan also establishes a company which will have revenues in the next few years of about two thirds those of 2014."
The company posted 7.15 billion euros ($7.76 billion) of revenue in 2014 before a series of missteps, including a failed capital increase, led it to file for preliminary bankruptcy protection on Nov. 25. The company has since been working with auditors and financial advisers KPMG and Alvarez & Marsal on mapping its debt and outlining a recovery plan. It must now deliver the feasibility plan to a group of creditor banks.
The plan presented to the board Monday doesn’t contain financial restructuring proposal, which will have to be negotiated with creditors, Abengoa said in a regulatory filing Tuesday. The agreement must be reached before the preliminary bankruptcy protection period finishes, which would be the end of March under Spanish bankruptcy law. If an agreement is not reached, a full creditor protection would imply “a destruction of value for creditors and shareholders higher than any scenario of continuity,” Abengoa said in the statement.
“Everything around Abengoa is complex (corporate structure, financing, relationships with creditor banks), which makes us concerned that the two months it has remaining may not be enough time to secure a restructuring agreement,” CreditSights analyst Andrew Moulder said in a note Monday.
Abengoa is in talks with creditors including banks such as Banco Santander SA and HSBC Holdings Plc and bondholders that are being advised by Houlihan Lokey Inc. and Clifford Chance LLP. The group of noteholders includes BlackRock Inc., AIG, Invesco, D.E. Shaw, Varde Partners and Centerbridge Partners.
Abengoa B shares, the most traded ones, were up 0.5 percent to 0.21 euros at 10:20 a.m. in Madrid after gaining as much as 21.6 percent earlier.
The company said it will seek to retain its engineering business as well as its technology business, with the aim of continuing to develop projects.